B Corps: A credible brand of corporate social responsibility?
If you’ve been inside Yonge and Bloor subway station lately, you’ve probably noticed McDonald’s Your Questions campaign. It’s the fast food chain’s latest effort to demonstrate accountability to its customers. By taking and answering questions from the public about its food, McDonald’s hopes that Canadians will view it less as a self-serving corporation and more of one committed to Corporate Social Responsibility (CSR).
Okay, maybe CSR is not exactly the correct term. Since CSR is sometimes known as acts of transparency or giving back to society, it can be a convenient banner for all types of good deeds, including charitable donations, corporate value statements, and foundation establishments.
These claims and acts, however, are not necessarily what Amol Mehra defines as “true CSR”. According to Mehra, “True CSR focuses on doing good for those who are affected by a corporation’s actual line of business.” True CSR requires companies to build policies and practices that reflect a concern for not just the bottom line, but also for the legal and human rights that could be compromised by their business activities. Thus, corporations are required to take responsibility for their impacts rather than merely covering for them with smart marketing or generous contributions.
In an age where corporations are too ready to broadcast their good works through all available channels of communication, it is increasingly difficult to tell just how responsible corporations really are.
B Corp certification might offer a solution. Companies that want to prove their commitment to true CSR can now take a third party assessment to measure their social and environmental impacts. If they score a minimum of 80 out of a possible 200 points, they can become B Corp certified.
B Lab, the non-profit behind B Corps, claims that certification ensures “rigorous standards of social and environmental performance, accountability, and transparency” are met. By getting certified and amending their incorporation documents to formally declare their mission to protect the triple bottom line, corporations can enjoy the advantage of being more attractive to employees, investors, and the public.
Currently there are 650 B Corps in 19 countries, but this number will surely increase as excitement continues to build around the concept. The Centre for Impact Investing at MaRS, the Canadian Hub for B Corps, affirms that B Corps are using “the power of business to solve social and environmental problems.”
Before I go any further, however, I must make the distinction between B Corporations and Benefit Corporations. They are often used interchangeably but do not mean the same thing—a case of bad branding? A B Corporation is a certification, while a Benefit Corporation is a legal status. In the United States, the latter is a big deal because traditionally, it is practically illegal for corporations to make any business decision that will hurt the bottom line, even if the decision is based on factors such as environmental sustainability or social good (e.g. Ford vs. Dodge). Having the legal structure of a Benefit Corporation, however, would protect business owners from getting sued by their shareholders if they chose to balance profits with societal impacts.
In Canada, it appears that Benefit Corporations are not yet applicable, so I am more interested in how the B Corporation could “redefine success in business.”
More specifically, I’m curious about the potential of B Corps to be a brand that identifies companies with a commitment to true CSR. Further, could B Corp certification be influential enough to inspire companies to evaluate—and possibly restructure—their business practices?
I won’t pretend that the B Corp concept is flawless. Since the organization setting the standards is the same organization providing certification for those standards, concerns might develop about conflicts of interest. In addition, since the benchmark score for gaining certification—80 out of 200—only amounts to 40 percent, skepticism might spread about the B Corp’s status as a business model to be proud of.
I will, however, watch out for the B Corp brand and hope that it continues to grow. Even though it is too early to tell whether B Corps could effect significant change, they have already illuminated the need to examine the credibility of CSR claims. Whether or not B Corp certification could play a substantial role in assessing that credibility, I think alerting corporations that people are no longer so ready to take CSR claims for granted is a step in the right direction.